The Bank of Israel today published the minutes of the Bank of Israel Monetary Committee meeting at which the June interest rate was set. It was decided to cut the interest rate by 25 basis points to 1.25%. The minutes state that five committee members supported the decision to cut the interest rate and one committee member voted against it.
The minutes state, "The committee members agreed that an analysis of macroeconomic data and survey results shows continued moderate growth. The GDP growth rate during the first quarter of 2013 is similar to the 2012 average, and it is possible that the actual rate is higher than reported, since the decline that was registered in domestic defense consumption may lead to an upward revision in the data in the next update, or be reflected in an increase later in the year.
"The committee members agree that home prices have continued to increase at a high rate in the past few months, and that no signs of moderation in housing market activity can be identified based on up-to-date data. While the increase in home prices in February (the last available data) was lower than in previous months (0.5% compared with more than 1% in the four preceding months), the committee estimates that since the monthly data are volatile, it cannot be concluded that there is moderation based on this," state the minutes.
"The main argument of the committee member who supported leaving the interest rate unchanged is that the current interest rate level is consistent with the current conditions of economic growth and inflation, in a way that balances the effect of a change in the interest rate on the forces acting for the shekel’s appreciation in the foreign exchange market and its ramifications on the forces acting to raise prices in the housing market."
Published by Globes [online], Israel business news - www.globes-online.com - on June 10, 2013
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